HSBC HLDGS PLC (HSBA.L) Q1 2026 Earnings Call Transcript
Bullish Other 302.35B United Kingdom
Next Earnings
2026-02-25
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HSBC posts solid 2025 results with 5% revenue growth, 17.2% ROTE, Hang Seng privatization completed, and ambitious 2026–2028 growth targets including 5% revenue growth and ROTE above 17%.
⭐ Key Highlights
Strong 2025 earnings and returns
HSBC delivered revenue growth of 5%, PBT up 7% to a record $36.6B, and ROE/ROTE of 17.2% on a constant currency basis.
Hang Seng Bank privatization completed
HSBC completed the $13.7B Hang Seng privatization in January 2025, creating a platform for growth and new cost/revenue synergies.
New growth targets for 2026–2028
Management set targets for revenue growth to 5% CAGR and ROTE of 17% or better from 2026–2028, with a 50% dividend payout ratio.
Cost discipline and simplification ahead of plan
HSBC realized $1.2B of annualized simplification savings in 2025, ahead of the $1B target, with 1% cost growth guidance for 2026.
Hang Seng synergies and funding for growth
Distinct plan to deliver circa $0.9B total Hang Seng synergies by 2028 (split into $0.5B reported and $0.4B upside) funded by a $0.6B restructuring charge and ongoing cost reallocations to growth areas.
✔Positive Signals
- Record PBT and ROTE of 17.2% in 2025
- Hang Seng Bank privatization completed ahead of schedule
- New targets for 2026–2028 including 5% revenue growth and ROTE ≥17%
- Significant simplification savings ($1.2B realized ahead of plan)
- Broad-based growth across all four businesses with deposit strength
✖Negative Signals
- ECL guidance around 40bp for 2026 implies ongoing credit risk headwinds
- Restructuring charge of $0.6B related to Hang Seng privatization
- Near-term volatility in interest rates and HIBOR impacting NII assumptions
- Partial reliance on wealth and fee-based growth which can be market-dependent
- Uncertainty around long-term revenue trajectory beyond 2028
📊Financial Results
- 2025 revenue +5% to $71B (forecast implied by 5% growth target)
- 2025 PBT +7% to $36.6B, ROTE 17.2%
- Q4 2025 revenue +6% to $17.7B; PBT +17% to $8.6B
- Ordinary dividend per share: $0.75 (+14% year-on-year)
- CET1 ratio 14.9% (plus 110bp impact from Hang Seng privatization post balance sheet date)
🔮Future Guidance
- 2026: Banking NII at least $45B; ECL around 40bp; cost growth ~1% on a target basis; CET1 14.0%–14.5%
- Hang Seng Bank synergies: $0.9B total by 2028, $0.6B restructuring costs; $0.5B revenue and $0.4B upside from synergies; additional $0.3B of costs added to reallocation
- 2026 guidance reflects ongoing simplification savings of $1.5B (plus $0.3B Hang Seng synergies) and capital discipline; buybacks reviewed quarterly
- Wealth disclosures updated to include broader balance and invested assets (new disclosures effective Q1 2026)
- Longer-term revenue growth path remains contingent on market conditions, with a commitment to annual progress and 5% revenue growth by 2028
💡Interesting Insights
- Generative AI is a core investment with a three-work-stream plan: empower employees, redesign processes, and enhance customer engagement, while maintaining safety and governance
Detailed Analysis
AI-generated summary of HSBC HLDGS PLC earnings call transcript.
In 2025 HSBC demonstrated momentum across its four core businesses, delivering 5% revenue growth and a 7% rise in profit before tax to a record $36.6B, with ROTE at 17.2%. The group completed the Hang Seng Bank privatization, enabling cost and revenue synergies and a stronger Hong Kong footprint. The bank reaffirmed focus on three strategic priorities: simplification and agility, customer centricity, and focused sustainable growth, while initiating new targets for 2026–2028 that include revenue growth of 5% and ROTE of at least 17% annually, together with a 50% dividend payout. HSBC also highlighted substantial simplification savings, continued deposit growth, and momentum in Wealth and Transaction Banking. The Hang Seng privatization is expected to unlock approximately $0.9B of benefits by 2028, supported by a $0.6B restructuring program and ongoing cost reallocation to growth opportunities, particularly in Hong Kong and Asia/Middle East. Management also noted macro and rate-headwind uncertainties, while committing to disciplined capital management and a quarterly review of buybacks.
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